The big news of the day, at least according to Drudge, is that Team Obama is laying the groundwork for removing the public option from their health care plan. This would be part of a larger strategy shift, which has seen Obama rephrase “health care reform” as “health insurance reform” after his personal popularity and public support for health reform diminished as the debate soured.
While I do support a strong public option, I agree with Ezra Klein that it isn’t the most important part of reform. Without the freedom to opt into it most Americans would not have any new option even with the public option, anyway. Universal coverage is the most important part of health care reform because it will actually save thousands of people’s lives, the rest is just about money. Universal coverage doesn’t necessarily have anything to do with the public option either, Massachusetts does it through a mandate and subsidies and so would a national plan.
That said, the other, slightly less, important part is still vital, because its not just about money, it’s about a lot of money- both to individuals who have their lives ruined when they get sick and to the government, who will have to pay for huge new obligations. That last part is probably what has the public is worried now, we are spending so much money and the economy is so bad that it’s hard to write another huge check.
However, It frustrates me is that no one talks about how expensive doing nothing is. Medicare is a $36 trillon dollar unfunded liability over the next 75 years because the costs of medical care keep going up. Just to give some context, that is about two and a half times the total economy of the country in a year.
Further, the American economy, the paradigm of the free market, has a health care system that is creates economic inefficiencies. Instead of free insurance markets consumers have to use their employer’s plan, creating mini-monopolies (plus many states have single insurance companies that control super-majorities of the insurance market, which are not so mini-monopolies). Consumers also don’t get to make decisions at the margin, comparing costs and benefits of additional care, because most of the costs of health care are hidden from consumers which encourages over-consumption. Rather than encouraging the free flow of labor and low barriers to entry for entrepreneurs, our system punishes employees who leave their coverage and business owners miss out on the tax exclusion loophole that only the employed enjoy. Even the vary basis of the market system itself, a guarantee of services for fees, is undermined by insurance companies using pre-existing conditions to deny coverage when you actually need them.
This bill will go a long way towards fixing these inefficiencies. It will stop insurance companies from denying coverage for pre-existing conditions. The health exchange with its co-opts (if not a public option) and tax breaks will encourage small businesses ownership and self-employment by making health insurance affordable. A health board that analyzes what works and taxes extravagant health benefits will encourage rational marginal decision making. Unfortunately, this bill will not end the monopolistic employer based system, though Wyden Bennet would. Still, the American economy would work better, people would have more choices and it would save lives. If it takes jettisoning the public option to make that happen, then so be it.